1386156.

4
Project no. 13.07/12813










High speed broadband services demand side study




Final report



Date: 29 June 2012

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CONTENTS
Executive summary 4
Introduction 6
High speed broadband definition 6
Home and workplace networking 7
Residential and business connections 8
Home and workplace wiring 10
Customer Premises Equipment 10
Network 12
Local access network 12
National transit 13
International transit 14
IP interconnection and peering 17
Network Neutrality 18
Data caps 19
Do data caps discourage usage? 19
Future data requirements 21
Latest developments 22
Mobile networks 23
Mobile data traffic forecast to grow substantially 23
The importance of mobility in the mix of high speed broadband services 23
Mobile data caps 25
Mobile data caps in rural areas 27
Content and applications 28
Consumer interest in content and applications 28
Cloud computing 30
Video content 31
Gaming 34
Consumer willingness to pay 36
Small and Medium Enterprises 37
SME willingness to pay 37
Rural broadband 39
e-health and e-education 42
Attachment 1: Standard residential connections details 46
Attachment 2: Map of New Zealand international transit arrangements 47
Attachment 3: IP interconnection in New Zealand 48
Glossary 49
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Tables and figures
Table 1: High speed broadband applications and content 7

Figure 1: Aerial drop lead (source http://nztelco.com/) 8
Figure 2: Buried lead-in (source http://nztelco.com/) 9
Figure 3: Telecom estimation of selected copper to fibre migration costs 11
Figure 4: Network map 12
Figure 5: International connectivity markets 15
Figure 6: Effective price ($) of international transit purchased at the date indicated
,
16
Figure 7: Explanation of peering and transit arrangements 17
Figure 8: Stephen Fry's tweets 20
Figure 9: Stephen Fry's tweets (part 2) 20
Figure 10: Average traffic per user actual and forecast (Source: Cisco) 21
Figure 11: Average traffic per household actual and forecast (Source: Cisco) 21
Figure 12: New Zealand mobile data traffic growth/devices (Source: Cisco) 23
Figure 13: Units of devices shipped annually, (Source: Forbes, Jan 2012) 25
Figure 14: US connected devices: situational usage 26
Figure 15: Percentage of on-line time that US consumers spend on various internet
applications and content, 2011 Q3 29
Figure 16: Stephen Knightly presentation, Fanatic Passion Levels 35
Figure 17: Additional amount consumers are willing to pay for high speed broadband,
(Source: Roy Morgan consumer survey 2011) 36
Figure 18: Additional percentage SMEs are willing to pay for high speed broadband, (Source:
Nielsen SME survey 2011) 38
Figure 19: Orewa College e-learning programme 43
Figure 20: Five point government action plan for faster broadband (Source: MED) 45


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Executive summary
1. This report focuses on demand side issues associated with the roll out of what are
often called Next Generation broadband services. As the supply side issues have been
addressed in New Zealand through the Ultra Fast Broadband (UFB) and Rural
Broadband (RBI) initiatives, introduced in the Telecommunications Amendment Act in
2011, the focus has now shifted to the demand side of the equation.
2. In June 2011 the Commerce Commission (Commission) initiated a demand side study,
under Section 9A of the Telecommunications Act, to identify and inform on any factors
that may affect the uptake of high speed broadband services in New Zealand,
delivered over both fixed and wireless networks.
3. The purpose of this study is to raise awareness of issues which may affect the uptake
of high speed broadband services in New Zealand.
4. The study includes the publication of three Issues Papers,
1
a two-day conference The
Future with High Speed Broadband: Opportunities for New Zealand
2
- the publication
of a draft report, submissions by interested parties, and the publication of this final
report.
5. The key points that have emerged in the course of this study are:
The costs related to connecting to the network, and using high speed broadband
services, have been identified by many parties during our study as a critical
factor. As these costs (non standard connections, re-wiring, upgrading
equipment and subscribing to the services) appear to be significant, they are
likely to reduce the initial uptake of high speed broadband services for both
consumers and SMEs.
Video content is likely to be the primary driver of consumers uptake of high
speed broadband services over the next few years. The rate of uptake is likely to
be higher if there is a diverse range of video on demand options available to
consumers. Currently, there are limited online video on demand services in New
Zealand compared with many other comparable countries.
Potential issues relating to data caps, backhaul capacity and IP interconnection
are likely to be resolved by market forces.
Rural users have the same appetite for fast broadband as urban users, but have
a more fundamental need, which is to be connected to basic broadband. They

1
The Issues Papers covered: Technical issues, e-health and e-education, and Content and willingness to
pay. Copies of the Issues Papers are at http://www.comcom.govt.nz/high-speed-broadband-services-
demand-side-study/
2
The conference website is http://www.futurebroadband.co.nz/. The videos from the conference are at
https://www.youtube.com/user/FutureBroadband1/videos
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are concerned that they could be left behind as New Zealand moves forward
with high speed broadband services. This issue has been recognised in the RBI
initiative and in the five point government action plan for faster broadband.
6. In this report the Commission identifies issues related to the uptake of high speed
broadband services. Where these issues are currently being considered or planned to
be considered by other parties as part of their future work programmes, the
Commission has stated so in this report.
7. In submissions received on the draft report, some parties commented that the
Commission was not explicit about what actions should be taken by which external
parties, or that the Commission did not make specific recommendations. Policy
decisions and regulatory recommendations fall outside the Commissions jurisdiction
under section 9A of the Telecommunications Act. The purpose of the report is to raise
public awareness of the issues, to enable the relevant parties to make informed
decisions.
8. The Commission notes that submissions made by some parties commented on the
need for this report to be updated in the future, and for the need to be more specific
about the Commissions monitoring processes.
9. The Commission is currently reviewing its monitoring strategy and will take into
account all the submissions received during the study in redesigning its future
monitoring programme. The revised programme will include the monitoring of the
rate of uptake of UFB services, changes in data caps, and the range and price of
services offered over UFB. The Commission will consult on the scope and regularity of
the monitoring reports.

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Introduction
10. In June 2011 the Commission initiated a high speed broadband services demand side
study (study) to identify and inform on any factors that may affect the uptake of high
speed broadband services in New Zealand.
3

11. This study is conducted under Section 9A of the Telecommunications Act 2001, which
empowers the Commission to conduct inquiries, reviews and studies into any matter
relating to the telecommunications industry or the long-term benefit of end-users of
telecommunications services within New Zealand.
4

12. The aim of the study is to raise awareness of demand side issues: what they are, how
they may evolve, and how they might affect uptake.
13. This report follows the three Issues Papers,
5
The Future with High Speed Broadband:
Opportunities for New Zealand
6
conference (Conference), a draft report issued post
conference and submissions by interested parties. This report is the final step in the
Commissions study. In this report, we have summarised the material included in
Issues Papers 1 and 3, included feedback received on the Issues Papers, perspectives
presented at the Conference and comments made in submissions received on the
draft report.
High speed broadband definition
14. For the purpose of this study the Commission has defined high speed broadband as a
broadband service capable of a peak speed of at least 50/50 Mbps
7
with sufficient
other technical characteristics to deliver the applications and content in the following
table.
15. High speed broadband is not a static concept; it will evolve over time as applications,
content, and needs change.

3
A copy of the terms of reference for the study is at http://www.comcom.govt.nz/high-speed-broadband-
services-demand-side-study/
4
Telecommunications Act 2001, subpart 2, section 9A.
5
The Issues Papers covered: Technical issues, e-health and e-education, and content and willingness to
pay. Copies of the Issues Papers are at http://www.comcom.govt.nz/high-speed-broadband-services-
demand-side-study/
6
Visit http://www.futurebroadband.co.nz/ for more details.
7
The speed of a broadband service is generally described in terms of peak downstream and upstream
speeds for example, a 100/50 Mbps service would have peak speeds of 100 Mbps downstream and 50
Mbps upstream. Downstream refers to data transmitted from the remote server to the users computer
and upstream from the users computer to the remote server. Peak speed refers to the fastest theoretical
transmission of data over that connection.
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Table 1: High speed broadband applications and content
Bandwidth
(symmetrical
8
upstream
and downstream)
Example applications and content delivered in real-time
500 kbps 1 Mbps
Voice over IP
Email
Basic web browsing
Streaming music (cached)
Low quality video
1 Mbps 5 Mbps
Email with large attachments
File sharing (small medium)
Remote surveillance
IPTV Standard Definition (SD)
Streaming music
5 Mbps 10 Mbps
Telecommuting (converged services)
IPTV SD (multiple channels)
HD video streaming
Gaming
Medical file sharing and remote diagnosis (basic)
Remote education
Building control
10 Mbps 50 Mbps
Telemedicine
Education services
IPTV HD (2-3 channels)
Gaming (complex)
Telecommuting with HD video
HD surveillance
Smart building control

16. While most individual applications or content listed in the table do not require high
speed connectivity, the combination of various content or applications being used
simultaneously in a work or home environment will create a demand for higher
speed/capacity connectivity.
Home and workplace networking
17. Our definition of home and workplace networking includes lead-ins (to the workplace
or home), home and business wiring and customer premises equipment.
18. There are costs related to home and workplace networking for both consumers and
businesses. These costs are likely to be related to:

8
Symmetrical refers to a broadband service with the same peak speed downstream and upstream.
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non-standard residential connections
9
and business connections, where the
connection costs might not be covered by Chorus and the Local Fibre
Companies (LFCs)
premises re-wiring, which may be required to experience the full benefits of
high speed broadband
customer premises equipment upgrades or replacements, which may include
equipment such as phones, security systems, alarms, TVs and set top boxes.
19. All high speed broadband services related costs falling on consumers and businesses
are likely to slow uptake of such services. This was confirmed by the submissions
made by retail service providers on the draft report. A number of parties, including the
Ministry of Economic Development (MED) and Crown Fibre Holdings (CFH), are aware
of this issue.
Residential and business connections
20. Under the Ultra Fast Broadband (UFB) contracts, the cost of connecting standard
residential customer premises to the network will be met by Chorus and the LFCs. A
standard connection is defined as one where the lead-in
10
is either:
overhead, either single (Chorus) or double (the LFCs) span of aerial drop lead,
(as illustrated in the picture below)

Figure 1: Aerial drop lead (source http://nztelco.com/)
or


9
See Attachment 1 for standard residential connection definition.
10
The lead-in cable is the cable that runs between the fibre access point (on the street) and the external
termination point (on the customers premises).
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underground and either 15 (Chorus) or 30 (the LFCs) metres in length (as
illustrated in the picture below)

Figure 2: Buried lead-in (source http://nztelco.com/)
from the fibre access point (the access point for connecting and maintaining the
lead-in to the distribution network fibre) to the External Termination Point (ETP) on
the premises agreed with the customer. The standard connection also includes an
extension of the fibre lead of up to either 5 (Chorus) or 10 (the LFCs) metres from the
ETP to a suitable location inside the premises (standard residential connection details
for Chorus and the LFCs are included in Attachment 1).
21. It is possible that some customers with non-standard connections might not have to
pay a connection fee. For example Ultrafast Fibres CEO has stated that, for their
customers, connections will be free.
11

22. There is no data available on the number of customers who are likely to require
non-standard connections. Vodafone commented - in its submission - that less than
half of customers in its trial of UFB services have been standard connections.
23. If the number of non standard connections is as high as Vodafone suggests, the impact
will be substantial. If residential customers with non-standard connections and
business customers have to bear the connection cost,
12
the uptake of high speed
broadband services might be hindered, especially as there is a perception that
residential connections will be free.
13


11
http://www.stuff.co.nz/waikato-times/business/technology/6261317/No-connection-fee-for-ultrafast-
broadband
12
As stated in the UFB Services Agreement Price Lists on the CFH website.
13
Refer to Issues Paper 1 and also http://www.med.govt.nz/sectors-industries/technology-
communication/fast-broadband/ultra-fast-broadband-initiative/faqs#costs
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24. Customers may also face reinstatement costs (eg, costs for reinstating the
garden/driveway to the satisfaction of the householder). It is not clear which party
may pay for these costs, if they fall on the end users, uptake is likely to be reduced.
Home and workplace wiring
25. Premises re-wiring may be required to enable users to experience the full benefits of
high speed broadband. For both consumers and businesses the cost of premises
re-wiring may hinder uptake of high speed broadband services. This was confirmed by
the Consumer and SME surveys carried out for the Commission.
14

26. Submissions received on this issue suggested that a possible solution to the issues
posed by home wiring is IEEE 1901 / HomePlug.
15
HomePlug uses the electrical wires
in the house to provide a network connection. Recent HomePlug products are
marketed as providing a network connection of up to 500Mbps. However, this is a
maximum speed and actual speeds that users experience are likely to be lower.
27. Submissions have also suggested that re-wiring of premises could be avoided by using
wireless network solutions. Wifi issues are discussed in the mobile section. The
current standard, 802.11n, may not provide sufficient average speeds in real world
situations to provide reliable services over high speed broadband services. However,
the next standard, 802.11ac, which will be finalised next year, delivers a much higher
maximum data speed. Equipment using the draft standard has recently become
available.
28. To encourage uptake it is important that Chorus, the LFCs and the retail service
providers provide consumers and businesses with relevant information.

Customer Premises Equipment
29. Customer premises equipment (CPE) is the telecommunication equipment (phones,
security systems, faxes, alarms TVs, set top boxes, game consoles etc) that end-users
have in their homes or businesses. Most of this equipment is designed to run over
copper based networks. Adapters are available that allow this equipment to be used
over IP networks; however this approach may not work reliably.


14
66% of the consumers surveyed thought that the cost of rewiring premises was a significant barrier to the
uptake of faster broadband. For almost half of the SMEs surveyed, rewiring would be a definite barrier if
it meant that they were unable to work while the rewiring took place. The percentage dropped to 32% if
only some inconvenience was caused by the re-wiring work.
15
See https://www.homeplug.org/home/
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30. Telecom has estimated
16
that 1.6-1.7 million customers may incur costs from moving
to an IP environment. Telecom also estimated
17
that replacing the impacted CPE
equipment would cost $811m, (or an average of over $500 per user) as shown in
Figure 3 below.
18,19



Figure 3: Telecom estimation of selected copper to fibre migration costs
31. Costs are still uncertain and may be significant. It is not clear where they will fall. If
these costs fall on consumers, the uptake of high speed broadband services is likely to
reduce. This may be a particular issue for lower socio economic groups.


16
In a document provided to the Minister of Communications and Information Technology on 31 March
2011 to support its Variation to the Undertakings request 4 (http://www.med.govt.nz/sectors-
industries/technology-communication/pdf-docs-library/communications/telecom-separation/variations-
4-subsections/variation-4-pstn-migration-white-paper.pdf)
17
These figures are likely to be overstated, as some upgrades would occur independently from the move to
an IP environment (eg, old or broken equipment being upgraded). In addition upgrades typically are not
just a cost but also include some benefits, such as enhanced quality and longer life.
18
http://www.med.govt.nz/sectors-industries/technology-communication/pdf-docs-
library/communications/telecom-separation/variations-4-subsections/variation-4-pstn-migration-white-
paper.pdf
19
The Commission received feedback from AlarmNZ that some of the figures could be overstated and that
other costs, eg, UPS power supply, fire alarms, have not been included. All feedback received on the
Issues Papers is on the Commission's website, http://www.comcom.govt.nz/high-speed-broadband-
services-demand-side-study/)
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Network
32. The simplified network map below serves as a guide for this section of the report. The
map shows the components of a broadband internet service from the end-user to the
IP interconnect point: home network and wiring, local access network, exchange
facilities, domestic and international transit and the Internet. The map is technology
neutral, eg, the local access components could be either fixed or wireless.


Figure 4: Network map
Local access network
33. The local access network includes the connection by a transmission medium (such as
copper wire, optical fibre, mobile, wireless or satellite) between each subscriber and a
local network node, commonly known as an exchange or central office.
34. The local access network is the infrastructure that enables the delivery of high speed
broadband services to customers. The delivery of high speed broadband services
requires other components, such as sufficient national and international capacity. So,
for example, a retail broadband service using a 50/50 Mbps fibre to the premises
(FTTP) local access component would not provide high speed broadband to a
customer if the retail service provider provisioned insufficient capacity for national
and international transit.
Customers
Home & Workplace
Networking
Caching
L
o
c
a
l

N
e
t
w
o
r
k

N
o
d
e
Wholesale Services
National Transit Local Access Network
Fibre backhaul
Peering
IP Interconnection
Internet
International
Switch
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35. Key quality of service characteristics, such as the extent that national and
international backhaul may be contended,
20
are not readily available to consumers or
generally understood. Without transparency about these characteristics, there is a risk
that high speed broadband retail services might not live up to end users expectations.
36. This is an issue for retail service providers to address. The Commission believes that
competitive markets will ensure that retail service providers provide services that
meet consumers expectations.
National transit
37. National transit refers to the data transmission between local network nodes within
New Zealand using the network components in Figure 4 above.
38. National transit services that support UCLL and UBA are subject to regulation, with
competitive links exempt from regulation. Most ISPs purchase national transit from
third party suppliers.
39. The Commissions competition reviews have concluded that competition for UCLL
(unbundled copper local loop) Backhaul has increased steadily since 2008, and recent
developments are likely to increase competition further. The Commission is currently
conducting a review of the regulated UCLL and UBA (unbundled bitstream access)
Backhaul services and will continue to monitor developments in this area. In addition
we understand that MED has started a stream of work that will include a review of
broader national transit issues.
40. Competition is likely to increase further because, as demand for high speed
broadband increases, the incentives to invest in infrastructure to provide national
transit should also increase. This is borne out by recent market developments
including:
FX Networks (FX) intends to build out to and interconnect at:
o UCLL exchanges FX currently interconnects at 21 exchanges and intends
to build out to more; and
o most of the UFB POIs
it was recently reported that China Telecom, together with Datalight and Maori
interests, has invested in a cable from Auckland to Whangarei,
21
and that
further such investments are possible.
22


20
The contention ratio is the number of users sharing the same data capacity. The lower the contention
ratio the higher the quality of service. A 10:1 contention ratio means that up to 10 broadband customers
are sharing the same bandwidth at any one time.
21
http://www.nbr.co.nz/article/snubbed-government-iwi-secure-china-telecom-funding-auckland-
whangarei-cable-ck-85258
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41. Given the current state of competition in the national transit market, it is unlikely that
competition issues associated with national transit will adversely impact consumers
uptake of high speed broadband services.
International transit
42. International transit refers to data transmission from New Zealands international
switch to other countries, and data transmission within those countries.
43. Almost all of New Zealands international connectivity is provided by the Southern
Cross Cable.
23
Alternative international cables have been proposed, with current
attention focused primarily on Pacific Fibre and the joint venture between Axin and
Huawei Marine.
44. The Southern Cross Cable forms a figure of eight with southern and northern loops
linking New Zealand and Australia to Fiji, Hawaii and the United States. Southern Cross
is owned by Telecom (50%), SingTel (40%), and Verizon (10%). Southern Cross says
that its prices in New Zealand are benchmarked against the prices it offers in Australia.
45. The structure of the New Zealand wholesale market for international data capacity is
shown in the simplified diagram below (a comprehensive map of New Zealand
international connectivity is provided in Attachment 2: Map of New Zealand
international transit arrangements).
46. While there is a single international cable, there are a number of wholesalers
providing wholesale data transmission services to retail service providers. At the right
edge of the diagram in Figure 5 below is Southern Cross, which operates the Southern
Cross international cable. The wholesalers sell wholesale services (denoted in Mbps)
to ISPs. The ISPs use those wholesale services as inputs into their retail broadband
services.

22
http://computerworld.co.nz/news.nsf/news/national-backhaul-may-be-next-for-chinese-investors
23
There is a second Trans-Tasman cable which has very limited capacity and is operated by Telecom. It is,
therefore, generally discounted from analyses of New Zealands international connectivity market.
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Figure 5: International connectivity markets
24

47. In the last couple of years there has been evidence of significantly greater competition
in the wholesale market including:
significant falls in prices paid by retail service providers (see Figure 6 below)
new entry in the wholesale market
the ability of retail service providers to switch between wholesale providers
evidence of some flow-on effects to down-stream markets, such as reduced
retail prices and higher data caps.
48. As the wholesale market has become more competitive, the price of international
transit has fallen significantly. For example the graph below shows the relative
changes in the price of international transit per Mbps/month observed by two ISPs
between 2006 and 2011:

24
Orcon Wholesale operates in the wholesale market through Odyssey Networks. It was stated in the
October 2011 edition of Spectrum that Odyssey sub-leases cable capacity to provide international transit
services. Orcon is owned by Kordia.
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Figure 6: Effective price ($) of international transit purchased at the date indicated
25,26

49. Pacific Fibre, in its submission to the draft report, commented that, according to a
report produced by Australian firm Market Clarity, New Zealanders paid 5.8 times
more per GB in 2011 than Australians. The submission argued that this disparity is
due, at least in part, to the lack of competition in the international bandwidth market
in New Zealand.
27

50. The cost of international connectivity has fallen dramatically over the last few years.
Falls over the last few months have been attributed to the potential entry of two
further international capacity providers, Pacific Fibre and a joint venture between Axin
and Huawei Marine. However, the actual entry of either of these new providers is
uncertain. It was recently reported that Pacific Fibre is experiencing difficulties in
finding financial backers for the proposed trans-Pacific communications cable.
28
If
more competition in the international capacity market does not eventuate, further
cost reductions may be unlikely.


25
Because ISPs have purchased capacity at earlier dates, the effective price they pay will be higher than the
market price.
26
The dollar amounts on this graph have been removed because they were sourced from commercially
sensitive information provided to the Commission.
27
http://www.comcom.govt.nz/assets/Telecommunications/Studies/UFB-Demand-Side/Submissions-on-
draft-report/Pacific-Fibre-Submission-on-High-Speed-Broadband-Demand-Side-Study-Draft-Report-11-
June-2012.pdf
28
http://www.stuff.co.nz/dominion-post/business/7093950/Pacific-Fibre-founders-chip-in
0
50
100
150
200
250
300
350
2006 2007 2008 2009 2010 2011
$/Mbps/month
$
Vocus enters the market
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IP interconnection and peering
51. IP-based interconnection is normally implemented by a mixture of peering and transit.
With peering, two ISPs agree to exchange traffic solely among their respective
customers, sometimes without payment; with transit, one ISP agrees to carry the
traffic of a customer (possibly also an ISP) to third parties, generally for a fee. These
freely negotiated arrangements result in a richly interconnected Internet, and do not
(in most cases) depend on any regulatory obligations.
29


Figure 7: Explanation of peering and transit arrangements

52. We discussed IP interconnection in our Issues Paper 1.
30
As the number of IP services
increases, it is likely that IP interconnection will be negotiated commercially, and is
unlikely that issues related to IP interconnection will impede the uptake of high speed
broadband services.
53. Peering enables Internet networks to communicate with each other (see Figure 7
above).

29
http://ec.europa.eu/information_society/policy/ecomm/doc/library/ext_studies/future_ip_intercon/ip_inter
con_study_final.pdf
30
See Attachment 3 for the discussion. Issues Paper 1 is at
http://www.comcom.govt.nz/assets/Telecommunications/Studies/UFB-Demand-Side/High-speed-
broadband-technical-issues-paper-19-December-2011.pdf
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54. It has been reported that some networks are taking local traffic off-shore (usually to
the West Coast USA) to peer, because this is preferable to peering on-shore; however
facts to back up these reports have been elusive.
55. A possible explanation had been advanced, suggesting that some .nz websites are
hosted in the USA for economic reasons, and that there is actually no local traffic to
peer with, as the traffic is coming from the US.
56. The Commission has not been able to get sufficient information to determine if this is
an issue. We understand that MED has started a stream of work that will include a
review of peering issues.
Network Neutrality
57. Net neutrality is the principle that ISPs will handle all network traffic in a
non-discriminatory manner.
58. The proponents of net neutrality consider that:
allowing ISPs and network operators to discriminate against competing or
unaffiliated content and services damages competition in downstream content
and applications markets
failure to mandate net neutrality would mean the Internet would cease to be
free and open, which would stifle innovation and prevent the emergence of
new highly valued content.
59. Opponents of net neutrality consider that reducing the ability of ISPs to manage their
networks would be inefficient and undermine their ability to offset the high
investment costs of upgrading and expanding their networks.
60. Most commentators accept differentiation is required for network management. The
key concern is that ISPs may block or discriminate against certain users or applications
in order to give an advantage to their own services and making commercial
arrangements with content providers to give preferential access to content in walled
gardens.
61. Stakeholders interviewed by the Commission generally considered that network
neutrality was not a significant issue in New Zealand. No major concerns were raised
in the submissions to the draft report. Internet New Zealand noted the need to define
what network neutrality means in the New Zealand context, and intends to commence
a work stream to look at net neutrality in New Zealand.
62. The Commission is of the view that network neutrality should not be an issue if ISPs
are transparent about the limitations or restrictions placed on their broadband
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services. The ISP marketplace is sufficiently competitive, that consumers are able to
switch relatively easily between providers if restrictions are an issue.
63. The zero-rating of certain traffic by some ISPs, while other traffic counts towards the
data consumed is regarded by some as a breach of net neutrality principles. Prof
Dwayne Winseck
31
commented at the Conference that the practice of zero-rating
traffic could have the effect of undercutting competition and diversity in the internet
access and media content markets and could skew the broadband Internet away from
the open, user-centric model to the provider-controlled, pay-per model.
32

64. Some New Zealand ISPs offer zero rated (or unmetered) content. For example, the
Orcon O Zone offers unlimited access to a number of sites, including i-SKY, trademe
and NZ Herald.
33
TelstraClear offers unmetered sites,
34
including trademe, tv3,
channel 4, ziln tv. Snap
35
offers both unmetered sites as well as all you can eat
bundles.
65. The Commission is of the opinion that the practice of zero rating of certain content,
for example locally cached content, is beneficial for end users. The Commission
expects that competitive pressures in the market will lead to an increase in data caps
and in the amount of content that is cached locally; consequently the practice and
importance of zero rating traffic is likely to be reduced.
Data caps
66. Historically the high costs of international connectivity have resulted in low fixed line
data caps. Recently data transmission costs have been steadily falling, while data caps,
and unmetered content have been increasing.
36

Do data caps discourage usage?
67. Some of the stakeholders interviewed by the Commission considered that data caps
discourage consumers from downloading content for the fear of exceeding data caps.
68. In the Content and applications section of this report, we comment that the key driver
of UFB services is content and in particular video content, such as HD movies. Such
content requires large blocks of data to be downloaded and, in New Zealand, may lead
consumers to hit data caps (and either have dial-up speeds for the remaining billing

31
http://youtu.be/Y7aB_OiWh6w
32
The paper written by Prof Dwayne Winseck is at http://t.co/49LisJ1d
33
http://www.orcon.net.nz/home/page/o_zone
34
http://www.unmetered.co.nz/
35
http://www.snap.net.nz/home/package/broadband
36
A more comprehensive discussion on data caps was included in Issues Paper 1
(http://www.comcom.govt.nz/assets/Telecommunications/Studies/UFB-Demand-Side/High-speed-
broadband-technical-issues-paper-19-December-2011.pdf)
20
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period, or being forced to pay extra for GB downloaded), especially if the broadband
speed is faster.
69. New Zealanders low data usage was discussed at the Conference. It was pointed out
that media and Internet use in New Zealand is strikingly low by global standards
37

and that New Zealand is far behind the US and Western Europe.
38

70. This low usage might be related to the size of the data caps, the lack of access to
content by New Zealanders (see Content and applications section below), or both.
71. A number of speakers mentioned British actor Stephen Frys tweets on his experience
with data caps in New Zealand, which were made during the first day of the
conference:

Figure 8: Stephen Fry's tweets
72. Stephen Fry later realised that he had reached his hosts data cap and therefore had
been reduced to dial-up speed.

Figure 9: Stephen Fry's tweets (part 2)
73. The Commission expects that the practice of penalising consumers for exceeding their
data caps, for example by slowing down their connection to dial-up speed, will be
reduced, as consumers will be able to access additional data at reasonable prices. The
Commission expects that competitive pressures will result in further data caps
increases, and symmetrical speeds becoming the norm.

37
Dwayne Winseck session.
38
Robert Pepper session.
21
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Future data requirements
74. According to the Cisco forecasts presented at the Conference (see Figure 10 below), in
five years time the average New Zealand internet user is forecasted to generate 13.7
gigabytes of Internet traffic per month (a six-fold increase from 1 GB per month in
2010). Cisco assumes that the average traffic per user in New Zealand will continue to
be lower than elsewhere.

Figure 10: Average traffic per user actual and forecast (Source: Cisco)
75. Similarly, the same Cisco presentation predicted that the average New Zealand
household will generate 33GB of traffic per month in 2015, an eight-fold increase from
2010 (see Figure 11 below).

Figure 11: Average traffic per household actual and forecast (Source: Cisco)

2.1
3
12.8
13.8 13.7
19.5
47.4
47.9
0
10
20
30
40
50
60
NZ AU (Western) EU US
2009
2010
2015 (forecast)
In 2015 NZ will be
where Europe and
US were in 2010
4.2
6.4
26.1
31.8
33
44.2
98.8
110.2
0
20
40
60
80
100
120
NZ AU (Western) EU US
2009
2010
2015 (forecast)
In 2015 NZ will have
similar level of traffic
to that generated by
the US and Western
Europe in 2010
22
1386156.4
Latest developments
76. As mentioned in the video content section later in this report, Quickflix has recently
launched its Over the Top (OTT) service in New Zealand. Customers buying the
streaming services might incur additional charges for internet usage as, unless the
content is zero-rated by the internet service providers, the internet traffic will count
towards subscribers data caps. Some of these customers may hit or exceed their data
caps, with the consequences explained in paragraph 68.
77. Two retails service providers, Orcon and Slinsgshot, have announced that Quickflix
content will be zero rated for their subscribers, enabling these subscribers to watch on
an all you can eat basis.
78. Telecom, Snap and Orcon have recently announced data cap increases, with Telecom
doubling broadband data for all customers on the Total Home packages;
39
Snap
increasing the data allowances on its plans;
40
and Orcon offering 60GB, 200GB and
1000GB plans.
41

79. The data caps offered by ISPs have increased significantly since the Commission
started this study. For example Telecom has doubled the data caps on most of the
packages offered (at the same cost) in September 2011 and then doubled them again
in April 2012; a broadband package that had a 10GB data allowance in September
2010 saw its data allowance increased to 20GB in September 2011 and, as of April
2012, has a 40GB data allowance.
80. If these trends continue, data caps should not inhibit the take-up of high speed
broadband services. However, if these trends do not continue, or do not occur at a
sufficient pace, data caps may impact uptake of high speed broadband services, since
the higher speed of these services might lead to consumers reaching their data caps
sooner.
42

81. The Commission currently monitors data caps, and will continue to monitor
developments in this area. The Commission is currently reviewing its monitoring
strategy and will take into account all the submissions received when redesigning its
future monitoring programme.


39
http://www.telecom-media.co.nz/releases_detail.asp?id=3793&page=index
40
http://www.snap.net.nz/support/news/12/en/so-we-heard-you-like-data.html
41
http://www.orcon.net.nz/about/article/orcon_boosts_genius_plans
42
As with higher speeds users are likely to download greater a quantity of data over the same period of
time.
23
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Mobile networks
Mobile data traffic forecast to grow substantially
82. Several presenters at the Conference commented on the importance of mobility in the
mix of high speed broadband services. Cisco
43
noted that last year, mobile data traffic
in New Zealand more than doubled. Most of this traffic was not transported over high
speed networks; however, Ciscos projected rapid growth of mobile data over the next
five years suggests that demand for high speed mobile broadband may increase
markedly.
83. Cisco forecasts that global mobile data traffic will increase 18 times from 2011 to
2016. Cisco placed the New Zealand growth at 12 times.
84. The mobile data traffic growth is being driven by new applications and hardware, such
as smartphones and tablets, machine to machine requirements, such as security
surveillance, and greater use of laptops to access the internet. Figure 12 below (taken
from the Cisco presentation at the Conference) also shows that, while laptops
dominate today, smartphones will lead the mobile data traffic growth by 2016.

Figure 12: New Zealand mobile data traffic growth/devices (Source: Cisco)
The importance of mobility in the mix of high speed broadband services
85. The Cisco presentation also noted the emergence of mobile data as a major form of
internet traffic. Gerd Leonhard,
44
media and communications futurist, also painted a
future that included mobility as a key theme.
86. There are two broad forms of mobile network technology:
Cellular networks. These networks deliver cellular radio coverage over licensed
spectrum to customers in a broad range of environments:

43
http://youtu.be/MT-vJUgSsAI
44
http://youtu.be/T_GiPFFFEog
24
1386156.4
o macro and micro environments ranging from rural areas to indoor
locations
o a range of user speeds from stationary to fast moving, eg, in a car
Wifi hotspots. Wifi access points connect to a fixed, local access network. These
access points tend to use unlicensed spectrum; interference is potentially an
issue, particularly in public environments. Wifi data speeds are significantly
faster than 3G cellular speeds. Wifi is typically deployed in localised hotspots
(eg, airports, coffee shops, CBDs, sport stadiums, houses) because access points
have limited range.
87. Advanced mobile networks have data speeds consistent with the Commissions
definition of high speed broadband.
88. The latest Wifi standard, 802.11n, has a maximum data rate of more than 100 Mbps
over a single channel. The next standard, 802.11ac, is scheduled for release in 2013
although some equipment may be available this year. This standard could have a data
speed of 500 Mbps on a single link and maximum speeds that are possibly over 1
Gbps.
89. The latest macro cellular standard, LTE-Advanced, is scheduled to be released this
year. LTE-Advanced has a theoretical peak speed of 1000/500 Mbps.
90. Spectrum for LTE technology in New Zealand will be available to be auctioned once it
is cleared by the switch-over to digital television, scheduled for November 2013.
91. The Cisco presentation included discussion about mobile data offloading. The term
offloading refers to the smart transfer of a users session between types of
broadband network. For example, a user might initially be transferring data from their
mobile device using the macro cellular network. Upon entering a Wifi hotspot, the
session is transferred to the Wifi access point and the fixed network. The benefits of
offloading include the ability for the user to use the least cost form of mobile
connectivity at any point in time and the availability of higher bandwidth. The
complementary nature of offloading means that growth in both fixed and mobile
broadband traffic will be related.
92. This offloading activity potentially enables mobile users to access high speed
broadband today, even if the cellular technology their devices use is lower speed.
93. As we discuss later on in this report, cloud computing applications will be a major
source of demand for fast mobile broadband. The rapid emergence of high-powered,
mobile devices including laptops, smartphones and tablets, means that activities that
once could only be done on the desktop can now be done anywhere. Cloud computing
25
1386156.4
and high speed broadband networks enable this location flexibility; placeshifting is a
mobility concept.
94. Many in the IT industry consider that these mobile devices represent the next era in
personal computing. The chart below shows the growth in various mobile devices
compared to desktop computers (note that the Y-axis scale is logarithmic).

Figure 13: Units of devices shipped annually, (Source: Forbes, Jan 2012)
45

95. The demand for greater mobile bandwidth is likely to increase as the computing
power of these devices increases. For instance, applications and content optimised for
the new iPad and its Retina display will be substantially larger than comparable
content for the iPad2, eg, the iMovie application has increased from 70 to 404 MB.
Mobile data caps
96. The reasons for cellular data caps tend to be different to the reasons for fixed data
caps.
97. The key differences between mobile and fixed broadband networks are that capacity
is more constrained on mobile networks and the marginal cost of network
infrastructure is higher. This means that the need for data caps to manage capacity
limits is more significant for mobile broadband than fixed broadband.
98. Cellular technology is likely to be able to deliver high speed broadband in the future,
at which point mobile data caps may become an issue for the take-up of mobile high
speed broadband. Mobile data caps, both in New Zealand and internationally, are

45
www.forbes.com/sites/timworstall/2012/01/19/the-end-of-the-pc-era/
26
1386156.4
much smaller than fixed broadband data caps. For example, Telecom offers 0.75, 2
and 4 GB monthly consumer mobile broadband data packages.
99. Mobile data caps are becoming more prevalent throughout the world as mobile voice
revenues decline and mobile data traffic increases substantially.
100. Not all this mobile data traffic will count towards a users cellular data cap, since
mobile traffic may be offloaded from the cellular network to a Wifi network, when the
latter option is available.
101. The picture below,
46
describes how US consumers use mobile devices over various
types of environment (for example 70% of tablet owners and 68% of smartphone
owners said they use their devices while watching television, compared to only 35% of
eReader owners). This picture illustrates the role that offloading is already playing in
connecting consumers: in several of the situations described below, consumers are
likely to be within the coverage of a Wifi access point and accessing the internet using
a fixed broadband network rather than a cellular network.

Figure 14: US connected devices: situational usage

46
http://blog.nielsen.com/nielsenwire/online_mobile/in-the-u-s-tablets-are-tv-buddies-while-ereaders-
make-great-bedfellows/. Nielsen surveyed nearly 12,000 connected device owners.
27
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Mobile data caps in rural areas
102. Drivers of demand for high speed broadband services in rural areas were discussed at
the conference.
103. Feedback received by the Commission, both at and post Conference, mentioned that
mobile data caps are more of an issue for rural people dependent on mobile
broadband. Their concerns relate to both the size of the data caps and the overage
charges if additional usage is required.
104. Rural broadband issues are discussed further in the Rural broadband section of this
report.

28
1386156.4
Content and applications
105. As we noted in Issues Paper 3,
47
content and applications requiring high speed
broadband connectivity will be the major driver of consumers uptake of high speed
broadband. For instance, Allan Freeth, CEO TelstraClear, has recently said content is
going to be the key for uptake on UFB.
48

Consumer interest in content and applications
106. Issues Paper 3 identified three broad categories of content that are likely to drive
consumers uptake of high speed broadband over the next several years:
Consumer cloud computing applications and related content
Video
Gaming.
107. The presentations and discussions at the Conference confirmed the importance of
these three forms of content.
108. Cisco
49
presented a forecast showing that video content
50
and applications could be
61% of global consumer internet traffic in 2015. This proportion is even higher if
managed IP video and downloaded (eg, peer to peer, P2P
51
) video is included. Cisco
forecasts that in New Zealand, video will be 81% of all consumer internet traffic in
2015.
109. Another theme was the rapid growth of cloud computing and the requirement for
high speed broadband to deliver this IT model. It was noted that much of the content
consumed using cloud applications over the next few years will be video content.
110. Although video is likely to be the primary driver of IP traffic over the next few years,
this does not necessarily mean that video will be the only major form of content
leading to the uptake of high speed broadband. Figure 15 below shows the results

47
http://www.comcom.govt.nz/assets/Telecommunications/Studies/UFB-Demand-Side/High-speed-
broadband-issues-paper-3-Content-and-willingness-to-pay-9-February-2012.nrl.pdf
48
http://computerworld.co.nz/news.nsf/news/sky-tv-and-the-telcos-telstraclear-boss-tackles-content-
issues
49
Robert Pepper, VP Global Technology Policy, Cisco. Consumer Demand Driving Ultra Broadband in a
Zettabyte World. http://futurebroadband.co.nz/sites/default/files/day1-pdfs/10.45%20-%20Pepper-
NZ%20Broadband-02-2012%2016by9%20FOR%20DELIVERY.pdf
50
Video content includes video calling (eg, Skype and FaceTime), mobile video, short form video (Cisco
defines short form video as video that is less than 7 minutes in length, eg, many You Tube videos) and
long form video (greater than 7 minutes).
51
In a P2P network, the peers are computers connected to each other via the Internet. Files can be shared
directly between computers on the network without the need of a central server. In other words, each
computer on a P2P network becomes a file server as well as a client. Bit Torrenting is an example of P2P
networking.

29
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from a 2011 Q3 Nielsen survey
52
on the amount of time US consumers spend on
various forms of internet content and applications.

Figure 15: Percentage of on-line time that US consumers spend on various internet
applications and content, 2011 Q3
111. These survey results show that consumers spend a relatively small amount of their
on-line time watching video content; video/movies represents 4% of consumers total
on-line time. Although video content is a major driver of internet traffic because of its
bandwidth-intensive nature, consumers spend most of their time engaged with other
forms of on-line content.
112. Social networking stands out as the primary application used on the internet. US
consumers spend 23% of their internet time on social networking and blog sites.
53

These are all cloud-based applications.
113. Consumers spend a further 10% on on-line games. While the bandwidth requirements
associated with many games are relatively modest, gamers playing higher-end games
(eg, some massively multi-player online games, MMOG) have a requirement for low
latency. As we discuss in the cloud section below, fibre networks have latency
characteristics superior to current copper networks.
114. These three important application and content categories cloud content, video and
gaming are discussed in the following sections.

52
Nielsen (2011). State Of The Media: The Social Media Report.
http://blog.nielsen.com/nielsenwire/online_mobile/social-media-report-spending-time-money-and-
going-mobile/
53
The most popular sites are Facebook (140m unique visitors), Blogger (50m), Twitter (24m), Wordpress
(22m), MySpace (19m), LinkedIn (18m).
23%
10%
8%
5%
4%
4%
3%
3%
3%
3%
35%
Social networks and blogs
Online games
E-mail
Portals
Videos / movies
Search
Instant messaging
Software manufacturers
Classifieds / auctions
Current events & global news
Other
30
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Cloud computing
115. As we discussed earlier, a major theme at the Conference was the rapid growth of
cloud computing.
116. Cloud-based applications and content reside in a cloud environment (they are in the
cloud) rather than on a users computing device. Physically, they are hosted in server
farms, which users access via the internet.
117. Strictly speaking, cloud computing is neither an application nor content. It is a form of
IT architecture. Examples of other IT architectures include LANs (local area networks)
and WANs (wide area networks). The cloud computing architecture is a distributed,
internet-based architecture with centralised servers that provide a scalable platform
providing on-demand computing resources.
118. Consumers access cloud-based resources on demand and may be billed on the
amount of resource they consume at any time. For example, Facebook is a
cloud-based application, which is accessed using an internet browser. The application
sits on Facebooks servers, along with all the information, photos etc that the user has
uploaded. The resource scales with the amount of information the user uploads. For
other cloud applications, where users pay for the service, the amount that a user pays
typically scales with the amount of resource being used.
119. Many industry commentators consider the emergence of cloud computing to be one
of the biggest trends currently occurring in the IT sector. For instance, Gartner
54

expects that the personal cloud will replace the PC as the digital hub by as soon as
2014. It notes that this trend will result in broad range of consumer devices including
laptops, smartphones and tablets. The cloud could be considered the glue that
connects a users range of devices together.
120. An important benefit of cloud computing for consumers is the ability to placeshift
content. Placeshifting is defined as consumers accessing digital media anywhere,
anytime, and on any device, both fixed and mobile. Digital media is stored in the cloud
and accessed using a variety of devices. For instance, this premise of any how and
anywhere access is the key attribute of Apples iCloud, with content accessible from
any Apple device (including the iPod, iPhone, iPad and Apple TV).
121. Cloud applications will be a major driver of IP traffic. Cisco estimates that 66% of
mobile data traffic in 2016 will be driven from cloud based applications, up from 40%
in 2011. Global cloud traffic is estimated to increase 12 fold between 2010 and 2015.
Cisco expects the demand for cloud services to grow faster than other forms of
consumption across the internet.

54
Gartner (2012). The New PC Era: The Personal Cloud.
31
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122. Much of this cloud traffic is driven by video applications including YouTube, Skype and
FaceTime and an increasingly range of over the top (OTT) video applications. Games
are another form of content that may reside in the cloud. For example, Sonys
PlayStation network and OnLive are examples of cloud based gaming environments.
These two forms of content and applications are discussed in sections that follow.
123. Robert Pepper, Cisco, made the point that advanced cloud services require networks
with latency below 50 ms. Cloud traffic is more symmetric than many other forms of
traffic, with cloud users engaged in both uploading and downloading data. Pepper
noted that low latency cannot be achieved over copper-based networks. He referred
to an FCC review in the US which found that fibre networks have a latency that is
around 50% lower than copper networks. A conclusion from the Cisco presentation is
that high speed broadband connectivity may be required for consumers to use
advanced cloud based applications.
Video content
124. A common theme of the Conference and submissions was the importance of video as
a key application that will drive the uptake of high speed broadband. Video content
was 37% of all consumer internet traffic in New Zealand in 2010. As mentioned earlier,
Cisco expects this percentage to more than double by 2015.
125. According to IHS Screen Digest,
55
legal online movie viewing in the US will exceed DVD
and Blu-ray use for the first time this year. In 2011, Amazon and Netflix accounted for
94% of all paid movie consumption online in the US. This trend highlights consumer
increasing preference toward la carte video consumption, away from the
traditional passive, linear model.
126. Cisco expects that the continuing trend in overall video over IP growth will be led by
long form video. This long form video growth will be caused by:
An increasing array of devices, including internet-capable TVs, media players,
laptops, tablets and smartphones
A growing number and variety of video on demand services including OTT and
IPTV services.


55
http://www.screendigest.com/reports/2012222a/2012_03_online_movies_the_future_today/view.html
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OTT
127. OTT is defined as video delivered by content providers over third party broadband
networks to a range of end-user devices.
56
These devices include any consumer
electronic device able to connect to an IP network and display video content.
128. OTT services potentially alter the established video content industry value chain. New
players can enter existing parts of the chain, unencumbered by the need to have
transmission capabilities. Consumers access to OTT services is independent of a
dedicated facility or network.
129. The OTT model offers the ability for customers to view content on an la carte basis.
With OTT, content can be delivered to consumers based on their individual
requirements: any content, anytime, anywhere on any device (eg, from a traditional
TV to a smartphone or tablet).
130. Issues Paper 3 noted that, to date, New Zealand has had a limited number of OTT
services. Existing New Zealand content providers and potential new domestic entrants
are interested in developing OTT propositions for delivering subscription video on
demand (SVOD) services. The introduction and shape of these new services will be
driven by companies access to video content rights. These rights have been held by a
small number of market participants.
131. There was considerable discussion at the Conference on the issue of content rights.
The CEO of SKY said that SKY does not own subscription SVOD rights. He went further,
stating that pay-per-view (PPV), VOD and SVOD rights for the most part, are
generally non-exclusive. The Managing Director of Mediaworks had a very different
perspective. She said content rights exclusivity was a major issue that would limit the
emergence of video over IP services.
132. Content rights were also a major topic in submissions that the Commission received
on the draft report. As with Conference participants, the views of submitters on this
issue differed widely. For instance, SKYs submission noted that there will be plenty of
opportunity for new online video companies to capture market segments and acquire
content rights. It argued that New Zealand consumers are already able to access a
wide range of OTT content, such as YouTube, or content through social media such as
Facebook or Google+. In contrast, Quickflix noted that the concentration of current
content rights has hampered its business development in New Zealand (see below).
MediaWorks and TelstraClear had similar perspectives; they commented that the

56
Examples of OTT services include Netflix, BBC iPlayer, Quickflix, FetchTV, Hulu, Amazon TV, Google TV,
Microsoft (X Box 360), Sony and YouTube.
33
1386156.4
entry of new online SVOD businesses is likely to be hampered by the limited
availability of content necessary to create quality, differentiated video services.
133. Quickflix, an Australian based OTT service provider, has recently launched its OTT
service in New Zealand. Quickflix has two service offerings:
A subscription service that allows customers to watch unlimited movies and
television for $16.99/month. New release movies are not included in this
package.
57

A pay-per-view service, where customers (current subscribers and non-
subscribers) can view a new release movie over a 48 hour time window for
$6.99.
134. Quickflix has advised the Commission that it has approached a number of ISPs to
negotiate zero rated, uncapped broadband traffic deals. Currently, it has
arrangements with Orcon and Slingshot. Quickflixs submission to the Commission
58

noted there are significant contractual issues that limit major ISPs ability to un-
meter (or zero-rate) the broadband traffic of OTT providers.
135. Quickflixs submission noted that existing content right arrangements in New Zealand
limit Quickflixs offering in New Zealand compared to its Australian service. For
example, SKY has content rights for HBO programming, which means that Quickflix is
unable to offer this premium content in New Zealand despite the fact that HBO is a
major shareholder in the company. Quickflix offers HBO content in Australia.
136. SKY commented on this point regarding HBO content in its submission. It noted that
HBOs preference is to do linear programming deals first, which SKY was able to offer
in New Zealand. SKY commented that at the time of the HBO deal, there were no
SVOD providers (including Quickflix) in New Zealand. SKY submitted that if Quickflix
had been in the market it may have been able to obtain SVOD rights from HBO.
Direct to fans
137. A business model that is not affected by companies ability to access content rights is
the direct to fans model. Under this approach, content providers deliver their
content directly to fans, bypassing a number of intermediary parties that exist in the
traditional video content value chain.
138. In the US, Major League Baseball (MLB), the National Basketball Association (NBA) and
the National Hockey League (NHL) offer OTT services that enable customers to watch

57
http://www.quickflix.co.nz/?joinnow=true&gclid=CM7g_8vc268CFQcipAodZXcVAg
58
http://www.comcom.govt.nz/assets/Telecommunications/Studies/UFB-Demand-Side/Feedback-and-
additional-info/Feedback-on-Issues-paper-3-Quickflix-NZ-Ltd-8-May-2012.pdf
34
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non-local games over broadband networks. Various subscription tiers are offered with
different content packages.
139. An example of the direct to fans model in New Zealand is Metservices metservice
tv.
59
This is a week day and severe weather bulletin. The bulletin includes week day
forecasts for the whole country and the three main centres.
140. In conclusion, video content is likely to be the primary driver behind consumers
uptake of high speed broadband over the next several years. The rate of this uptake
may be affected by the diversity of video on demand services that are available and
the quality of content that they offer. The entry of Quickflix is an early indication that
a greater range of video services may be emerging in New Zealand. Parties will be
watching closely the evolution of the video content sector over the next few months
and its impact on consumers uptake of high speed broadband.
Gaming
141. Gaming is another form of content that could drive the uptake of high speed
broadband in the consumer market.
142. On-line gaming represents a small part of global IP traffic, currently around 0.4% of IP
traffic. However, this small traffic volume does not represent the likely demand for
high speed broadband from gamers.
143. Figure 15 above shows that internet users spend 10% of their time playing on-line
games. This proportion is clearly much bigger than the gaming proportion of IP traffic.
Much of current gaming traffic is likely to be low bandwidth. Some gaming traffic may
be recorded as social media traffic.
60

144. The bandwidth requirement for on-line gaming is likely to increase as the gaming
ecosystem develops and high bandwidth networks are deployed more widely. Over
time, the percentage of time spent on gaming may translate in to a much greater
volume of IP traffic. For instance, the next versions of Sonys PlayStation and
Microsofts Xbox are likely to include greater cloud functionality.
61

145. Apart from bandwidth, gamers playing high-end on-line games require low latency
connectivity. Fibre networks have much lower latency than copper-based networks.
146. Stephen Knightly,
62
director of inGame and chairperson of the NZGDA, delivered a
presentation on gaming at the Conference. Stephen commented that entertainment is

59
http://www.metservice.com/tv/index
60
A ComScore report notes that Facebook users spend 10% of their time on applications.
http://www.insidefacebook.com/2011/07/26/most-facebook-browsing-on-news-feed/
61
The Playstation Network and Xbox Live on-line gaming environments are both cloud-based environments.
62
http://www.youtube.com/watch?v=W6BfwJlQdds&feature=colike
35
1386156.4
a valid economic driver and reason to have UFB. He said that games and social media
are a gateway for many people to get onto the internet and become digital
consumers. As these users become comfortable with being on-line they may naturally
transition to using services such as e-health and e-education.
147. Stephen also spoke about the gaming industry and how it is already larger than the
music and Hollywood blockbuster industries. Although very small, the New Zealand
gaming industry grew 46% in 2011. The industry is generating high tech, above
average salary, full time jobs and producing digital weightless exports from New
Zealand.
148. Stephen commented that NZ consumers, and especially younger consumers, are
passionate about gaming, and that this level of passion shows that gaming is likely to
be a key driver of uptake of high speed broadband. For example the picture below
shows that the 6,000 New Zealanders surveyed are as passionate about games as they
are about rugby league.

Figure 16: Stephen Knightly presentation, Fanatic Passion Levels

36
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Consumer willingness to pay
149. The Commission engaged Roy Morgan
63
to survey consumers interest in high speed
broadband. The survey was discussed in Issues Paper 3. Amongst other things, the
survey measured consumers willingness to pay for a high speed broadband service.
The survey found that while 4% of consumers said that they were willing to pay more
than $20 extra per month, 37% said that they were willing to pay between $5 and $10
extra per month. A further 40% of consumers (640,000 households) said that they
were willing to pay up to $5 extra per month. These results are summarised in Figure
17 below.

Figure 17: Additional amount consumers are willing to pay for high speed broadband,
(Source: Roy Morgan consumer survey 2011)
150. The Issues Paper caveated these survey results, noting that the results from research
like this may be somewhat limited when respondents are asked to evaluate a product
that has not been introduced (that is, a concept or abstraction). Accordingly, the
results from this survey are likely to be only indicative, at best. This point was made a
number of times at the Conference.


63
http://www.comcom.govt.nz/assets/Telecommunications/Studies/UFB-Demand-Side/Roy-Morgan-
Consumer-Behaviour-in-NZ-Telecommunications-Market-Presentation-High-Speed-Broadband-
Conference-Feb-2012.ppt
%

o
f

c
o
n
s
u
m
e
r
s

i
n
t
e
r
v
i
e
w
e
d
Amount more than current spend
Consumer Willingness to Pay
$0 - $5/mth more , 40%
$5 - $10/mth more, 37%
$11 - $20/mth more, 15%
Over $20/mth more, 4%
37
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Small and Medium Enterprises
151. Small and medium-sized enterprises (SMEs) are defined as organisations with fewer
than 20 employees. The Ministry of Economic Development and Statistics New
Zealand estimate that SMEs account for around 40% of New Zealands total output
and employ approximately 31% of the New Zealand workforce. There are 456,929
SMEs 97% of businesses in New Zealand.
152. SMEs include a very diverse range of organisations, with different ICT needs.
Accordingly, the demand for high speed broadband, including the content and services
used on this infrastructure, will vary widely between SMEs. For instance, a small
graphic design firm may be interested in purchasing high bandwidth connectivity. On
the other hand, an owner-operated trade enterprise (eg, a plumber or electrician) is
likely to have significantly lower demand.
153. Issues Paper 3 presented a summary of the results of the Commissions Nielsen
survey
64
of SMEs interest in high speed broadband. The survey found that the
majority of SMEs were satisfied that current broadband services give them the ability
to use the applications they want to use (76% very satisfied or satisfied) and with
reliability (70%). Even so, around a quarter were dissatisfied with price,
download/upload time and mobile broadband coverage.
154. SME discussions at the Conference were largely consistent with the survey findings.
SME presenters commented that SMEs generally have limited human resources and
no specialised IT resource. Their primary requirements for broadband are ease-of-use
and reliability. For many SMEs, bandwidth is a lower priority. Stuart Birch,
65
from
Education Personnel, a SME that uses video conferencing to deliver its service to
international customers, commented that its requirements include a service that is
easy-to-use, fast and reliable. Local fast broadband is an important component of the
solution, but the SMEs requirements also included reliable international transit and
local country bandwidth.
SME willingness to pay
155. The Nielsen survey also measured SMEs willingness to pay for high speed broadband.
The survey tied the question on willingness to pay to concrete examples of the types
of services that consumers could use high speed broadband for, such as high definition
telepresence and high definition security.



64
http://www.comcom.govt.nz/assets/Telecommunications/Studies/UFB-Demand-Side/Feedback-and-
additional-info/Nielsen-SME-Survey-Results-Presentation-High-Speed-Broadband-Conference-February-
2012.pdf
65
http://youtu.be/Ia98HcsPGbI
38
1386156.4
156. The survey found that 10% of SMEs said that they would be willing to pay greater than
20% more for high speed broadband. Overall, 26% of SMEs said they would be willing
to pay more than an additional 10% of their current bill for faster connectivity. A
further 34% of SMEs said they would pay up to 10% more, while 35% said that they
would pay no more than their current charges. These results are summarised in Figure
18 below.

Figure 18: Additional percentage SMEs are willing to pay for high speed broadband, (Source:
Nielsen SME survey 2011)
157. In conclusion, the cost of high speed broadband services is likely to be a significant
issue for many SMEs. The market is likely to recognise this cost sensitivity in service
offerings. We expect that competition between retail service providers should result
in broadband packages that meet the needs of SMEs.

%

o
f

S
M
E
s

i
n
t
e
r
v
i
e
w
e
d
Amount more than current spend
SME Willingness to Pay
>40% more, 5%
21 - 40% more, 5%
11 - 20% more, 16%
0 - 10% more, 34%
No more, 35%
10% of SMEs are willing to pay an amount more
than 20% higher than what they are currently
paying
Those more willing to pay an amount more than
20% higher are those who import and export
(25% cf. 10% average of all SMEs)
Those less willing to pay an amount more than
20% higher are those in a provincial town (5% cf.
10% average of all SMEs)
Those with a turnover of under $500k are more likely
to be unwilling to pay any more (47% cf. 35% average
of all SMEs)
39
1386156.4
Rural broadband
158. The presentations
66
at the Conference on rural broadband issues stressed the role
broadband can play in connecting both rural businesses and communities with the
rest of New Zealand and the world. This is consistent with the governments objective
for its Rural Broadband Initiative (RBI): to help rural communities, schools, and
health services as well as rural businesses [through significantly better broadband
services].
159. The governments RBI has two phases:
Phase One
Provide community broadband coverage to 86% of rural homes and
businesses. This coverage will be delivered using a combination of fixed
wireless, with a minimum peak bandwidth of 5Mbps, and fibre-to-the-node
(FTTN), initially providing ADSL2+ speeds
Build over 3,100 km of fibre to 744 rural schools, 1224 rural cabinets and 6
rural hospitals. This fibre can be accessed at points along its length, providing
flexibility to extend the reach of fibre services in the future.
Phase Two
Extend the reach of RBI to address priority users that were not covered by the
original UFB and RBI initiatives. These users could not be identified until
uncertainty over UFB boundaries (which were the subject of commercial
negotiations) had been resolved. RBI Phase Two covers the more populous
rural areas, such as larger rural towns. In Phase Two, fibre will be provided to
193 additional schools, 37 rural hospitals, 10 integrated family health centres
and 183 rural libraries.
160. In addition to these two phases, the RBI also includes the Remote Schools Broadband
Initiative (RSBI). Under this initiative, broadband services will be provided to New
Zealands 57 most remote schools.
161. Telecom (now Chorus, following the separation) and Vodafone (the Joint Venture
Provider) were awarded the RBI contract in April 2011. Chorus is delivering the fibre
part of the initiative. Vodafone is delivering the radio part of the initiative which
connects communities using a fixed wireless solution.
162. Ng P Waea (the National Mori Broadband Working Group) was established to
provide advice to the Joint Venture Provider about Mori development opportunities
associated with RBI. This advice includes issues around the coverage and connectivity
to marae, wnanga, kura, khanga, rnanga, and other Mori organisations.

66
http://youtu.be/zcRAw3bS-6M
40
1386156.4
163. Although the data speeds that will available to rural consumers may be faster than
current speeds in many rural areas, with the exception of the fibre-to-schools
component, these speeds are lower than the Commissions definition of fast
broadband.
164. The presentations at the Conference were not focussed on the speed of broadband,
but rather the availability of any form of on-line access. For instance, Liz Evans,
67
the
Rural Women New Zealand National President, noted that on-line availability and cost
are major issues in rural communities. In some areas, there is still a reliance on
satellite access to the internet, which is slow and expensive. A significant proportion of
the Rural Women New Zealand membership is not on-line at all.
165. Potaua Biasiny-Tule,
68
Director of Digital Mori, expressed broadly similar issues for
rural Mori communities. He commented that rural broadband for Mori was
over-hyped, over-promised and under-delivered. Despite the establishment of Ng
P Waea, he said that marae and papakinga are not included adequately in current
broadband initiatives.
166. Antony Royal,
69
Chair of Ng P Waea, said that rural communities should focus on
developing the opportunities that the RBI provides. He floated the idea that rural
marae could be hubs for the rollout of broadband, analogous to the role schools are
playing in the RBI.
167. Phil McKenzie,
70
from Landcorp, spoke about the opportunities that broadband
provides for farms in New Zealand. He highlighted the potential to use broadband to
assist in improving the efficiency of farm performance, particularly in relation to the
management of livestock. He echoed the other rural speakers, noting that the key
challenges for Landcorp regarding broadband are availability, speed and geographical
coverage.
168. The overall message from the Conference is that many rural people and businesses
consider that they are not well served by even the current generation of broadband.
There is a risk that rural communities and businesses could be left behind, as New
Zealand moves forward with high speed broadband services, this is of particular
concern, given their significance to the economy. This issue has been recognised in the
RBI and in the five point government action plan for faster broadband (see Figure 20).

67
http://youtu.be/SCzyLJPwdM4
68
http://youtu.be/L5gNdmQwxdc
69
http://youtu.be/J0KQULwIejM
70
http://youtu.be/SOTdP8fkIP8
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169. The Commission is also aware of an initiative by Vodafone NZ, the Community Cell
Site Request Scheme
71
aimed at improving mobile coverage in rural communities that
are outside the scope of the RBI. Vodafone recently announced that two rural
communities North and South Catlins in the South Island, and Waihau Bay in the East
Cape will have cell sites built in 2012.
170. Internet New Zealand, in its submission to the draft report, commented that, by using
the 50/50 Mbps high speed broadband definition the Commission has ignored any
consideration related to rural broadband uptake. As commented above, rural users
have the same appetite for fast broadband as urban users, but have a more
fundamental need, which is to be connected to basic broadband. They are concerned
that they could be left behind as New Zealand moves forward with high speed
broadband services. This issue has been recognised in the RBI and in the five point
government action plan for faster broadband.


71
http://www.vodafone.co.nz/smart-network/community-cell-site/
42
1386156.4
e-health and e-education
171. e-health and e-education issues were discussed in Issues Paper 2,
72
written for the
Commerce Commission by Ernie Newman.
172. The Commission has not received feedback on the e-health issues raised in the issues
paper. We have received some feedback on the e-education issues.
173. The Conference had an e-health and e-education panel discussion. In addition Dr Kate
Cornick,
73
from the Australian Institute for a Broadband-Enabled Society (IBES), spoke
about how high speed broadband can provide e-health and e-education opportunities.
174. Some of the opportunities are related to e-learning, with classrooms not confined to
the physical four walls of a school room. For example, children have the opportunity
to telecommute with other children around the world using video-conferencing and
interacting using on-line tools. e-learning also enables children to share teaching
resources or attend school from home when they are unable to physically attend
classes.
175. Dr Cornick also discussed the following e-health examples:
video consultations. The Australian Medicare benefits scheme has been
extended to cover telehealth (the delivery of health-related services and
information via telecommunications technologies). The scheme covers GPs
teleconsultation
74
charges and financial support for the purchase of associated
equipment and online training
3D telemedicine.
75

remote monitoring.
176. Dr Cornick spoke about broadband saving lives; for example 72% of hospitals in
Australia are unable to treat acute strokes as well as metropolitan hospitals, by using
teleconsultations with specialists teleconsulting into a regional hospital, eight lives
were saved over the study period.
177. Aged care was mentioned as the most obvious place where technology can play an
important role. IBES is focusing on the well being of elderly people, with trials enabling
them to communicate and connect with other people, or to take up serious gaming

72
http://www.comcom.govt.nz/assets/Telecommunications/Studies/UFB-Demand-Side/Issues-paper-2-e-
health-and-e-education-January-2012.pdf
73
http://youtu.be/MUlul2aeuQ4
74
Teleconsultation is a virtual consultation between a medical professional and patient.
75
3D telemedicine is the use of three dimensional video- conferencing equipment (which enables
simultaneous verbal and visual communication) with patients, clinicians, management and
educators/supervisors located at some geographic distance from each other.
43
1386156.4
aimed at rehabilitation and exercise. Kate commented that games and apps need to
be designed for the aged care sector, as uptake would be more forthcoming this way.
178. Other key points mentioned were:
Literacy: if people dont know what broadband can do for them, how do you tell
them so that they can innovate in their own areas of the economy?
Cost: who pays for the broadband connection? For example if we expect
university students to stream lessons online, they will see 10-20 hours of lessons
online per week, and download a vast amount of data. The cost of this large
amount of data could be considerable for students. This issue of affordability is
also relevant to the health care sector, where the people who stand to benefit
the most are often the people who dont have the opportunity because of
financial or literacy constraints.
179. In the education part of the panel discussion Kate Shevland,
76
principal of Orewa
College (a co-ed school with 2,000 pupils) commented on the colleges experience in
bringing devices in the classroom (see Figure 19 below). She noted that the problem of
who pays is a major concern for schools, in terms of both the cost and possible
subsidy of devices and the cost of UFB services. She also commented that there is
considerable administrative burden and costs associated with implementing
e-learning programmes.

Figure 19: Orewa College e-learning programme
180. In the health panel discussion Richard Medlicott
77
commented that there are already
initiatives on the West Coast where doctors and patients are having remote clinics,
using expertise from specialists in Christchurch. Also hospitals use video conferencing
facilities for multidisciplinary team meetings. Richard referred to video consultations
being the killer patient app, in terms of freeing his patients time as well as his own.

76
http://youtu.be/f5IgEmvEH14
77
http://youtu.be/J78r3dGM7jE
44
1386156.4
He noted that the costs of these initiatives need to be considered, both in terms of
charging for video consultations and setting up the equipment.
181. MED will be looking at e-health and e-education issues as part of the five point
government action plan for faster broadband.
78


78
http://www.med.govt.nz/sectors-industries/technology-communication/fast-broadband/pdf-and-
documents-library/Five-point-Government-Action-Plan-Faster-Broadband.pdf
45
1386156.4

Figure 20: Five point government action plan for faster broadband (Source: MED)
46
1386156.4
Attachment 1: Standard residential connections details
Chorus Ultrafast Fibre Enable networks Northpower Fibre
Fibre lead-in from the
Fibre Access Point to
an ETP at the clos est
convenient point on
the End User Premises,
as agreed with End
User, where the Fibre
Lead-in utilises no
more than:
Fibre lead-in from the
Fibre Access Point to
an ETP at the closest
convenient point on
the End User Premises,
as agreed with End
User, where the Fibre
Lead -in utilises no
more than:
Fibre lead-in from the
Fibre Access Point to
an ETP at the closest
convenient point on
the End User
Premises, as agreed
with End User, where
the Fibre Lead -in
utilises no more than:
Fibre lead-in from the
Fibre Access Point to
an ETP at the closest
convenient point on
the End User Premises,
as agreed with End
User, where the Fibre
Lead -in utilises no
more than:
100m of approved
conduit or open trench
(already in place at the
time of installation) or
100m of approved
conduit or open trench
(already in place at the
time of installation) or
100m of approved
conduit or open
trench (already in
place at the time of
installation) or
100m of approved
conduit or open trench
(already in place at the
time of installation) or
a single span of aerial
drop lead (available
only in areas where
there is overhead
deployment) or
a double span of aerial
drop lead on existing
poles from the fibre
access point (this will
include road crossings)
(available only in areas
where there is
overhead deployment)
or
a double span of
aerial drop lead on
existing poles from
the fibre access point
(this will include road
crossings) (available
only in areas where
there is overhead
deployment) or
a double span of aerial
drop lead on existing
poles from the fibre
access point (this will
include road crossings)
(available only in areas
where there is
overhead deployment)
or
15m of buried lead-in
(available only in areas
where there is
underground
deployment); and
30m of buried lead-in
(available only in areas
where there is
underground
deployment); and
30m of buried lead-in
(available only in
areas where there is
underground
deployment); and
30m of buried lead-in
(available only in areas
where there is
underground
deployment); and
An extension of the
Fibre Lead-in up to 5m
radius from the ETP to
a suitable mounted
SC/APC connector at a
secure location inside
the End User Premises;
or if there is an OFDF
beyond the ETP, a
splice or LCA connector
on the OFDF
An extension of the
Fibre Lead -in up to
10m radius from the
ETP to a suitable
mounted SC/APC
connector at a secure
location inside the End
User Premises or if
there is an OFDF
beyond the ETP, a
splice or LCA
connector on the
OFDF
An extension of the
Fibre Lead -in up to
10m radius from the
ETP to a suitable
mounted SC/APC
connector at a secure
location inside the
End User Premises or
if there is an OFDF
beyond the ETP, a
splice or LCA
connector on the
OFDF
An extension of the
Fibre Lead -in up to
10m radius from the
ETP to a suitable
mounted SC/APC
connector at a secure
location inside the End
User Premises or if
there is an OFDF
beyond the ETP, a
splice or LCA connector
on the OFDF

47
1386156.4
Attachment 2: Map of New Zealand international transit arrangements
79



79
This map is reproduced from http://www.ispmap.co.nz/
48
1386156.4
Attachment 3: IP interconnection in New Zealand
182. In June 2008, the Telecommunication Carriers Forum (TCF) established the IP
Interconnection working party (IPIWP) to provide a forum for Telecom to consult with
industry on IP interconnection issues (as part of its Operational Separation
Undertakings), and to develop an industry code of practice for IP Interconnection
183. In 2010 the scope of the IPIWP was revised to cover three key areas of
interconnection of VOIP only:
commercial principles
technical standards
technical trial and/or pilot.
184. To date, the IPIWP has focused on a trial using Minimum Technical Standards
required to pass IP voice calls. The minimum standard specifies interconnection of
voice converted to ITU-T G.711 standard for interconnection (PSTN standard), with all
other options to be negotiated on a bi-lateral basis.
185. Due to a perceived lack of value in trialling, most existing VoIP providers have pulled
out of the process, citing resource issues and a view that the trial results will be
irrelevant by the time there is significant migration of PSTN customers to IP.
80

Next steps for IP interconnection
186. In the longer term, it is likely that mainstream voice services will evolve and diverge
from the PSTN service description. Changes may include:
no requirement for conventional telephone numbers/dialling
the integration of video, messaging and other information (such as location)
into the call
higher or lower quality/price options under user control.
IP service interconnection to support innovation and the evolution of future IP services is
outside the scope of current commercial or standardised IP interconnection schemes.


80
There is currently no forecast for this migration except for a general understanding that the PSTN
platform is nearing the end of its viable lifetime, and that migration will ultimately be required.
49
1386156.4
Glossary
Term Definition
3G Third Generation. A term commonly used to describe the third
generation of technology used in a specific application or industry. In
cellular telecommunications, third generation systems use wideband
digital radio technology as compared to second generation
narrowband digital radio.
4G Defined by the International Telecommunications Union (ITU) as
mobile systems with new capabilities that go beyond those of IMT-
2000 (3G). Also referred to as IMT-Advanced. Such systems will
provide access to a wide range of telecommunication services
(including advanced mobile services), supported by mobile and fixed
networks that are increasingly packet-based. The ITU has determined
that LTE-Advanced and WirelessMAN-Advanced should be accorded
the official designation of IMT-Advanced.
Byte/ bits
relationship
1 byte (B) = 8 bits (b).
Bitstream A stream of compressed data.
Caching The storage of data closer to the end user, for use at a later time.
CPE Customer Premises Equipment. CPE is all telecommunications
terminal equipment located on the customer's premises, including
telephones, private branch exchanges (PBXs) and data terminals.
Data cap An Internet subscription data cap is a method employed by ISPs to
limit the volume of data downloaded and/or uploaded by subscribers
during a fixed period, normally a month. Once a fixed data cap has
been reached, lower speed or extra access charges may apply. Also
referred to as a data allowance.
Fixed wireless Fixed wireless is the use of wireless technology to provide voice, data,
or video service to fixed locations. Fixed wireless services include
wireless local loop (WLL), point-to-point microwave, wireless
broadband. Fixed wireless systems may replace or bypass wired
telephone services, high-speed telephone communication links, and
cable television systems.
FTTP Fibre to the premise is a distribution system that uses fibre optic cable
to connect telephone networks to nodes that are located within
businesses and homes. FTTP is also known as fibre to the home (FTTH)
and fibre to the building (FTTB).
GB A gigabyte is one billion bytes of data. When a gigabyte is used to
identify the amount of data storage space (such as computer memory
or a hard disk), it commonly refers to 1,073,741,824 bytes (2
30
) of
information.
50
1386156.4
Term Definition
GSM Global system for mobile communication (GSM) is a wide area
wireless communications system that uses digital radio transmission
to provide voice, data, and multimedia communication services. A
GSM system coordinates the communication between mobile
telephones (mobile stations), base stations (cell sites), and switching
systems.
HD High definition. HD video is the resolution of enhanced analogue
video and digital video. The resolutions of HD range from 480/60p-
480 pixels (vertical) by 728 pixels (horizontal) with 60 progressive
fields (60p) per second to 1080/60p-1080 pixels (vertical) by 1920
pixels (horizontal) with 60 progressive fields per second.
IEEE 802.11n An IEEE 802.11 wireless network standard that increases transmission
speeds to 300 Mbps and beyond. Because 802.11n works in both the
2.4 GHz and 5 GHz frequency bands, it is compatible with legacy 11a
and 11b/g users.
IP Internet protocol. IP is low-level network protocol that is used for the
addressing and routing of packets through data networks. IP is the
common language of the Internet. The Internet protocol only has
routing information and no data confirmation rules. To ensure reliable
data transfer using Internet protocols, higher level protocols such as
TCP are used. IP is specified in RFC-791
(http://www.ietf.org/rfc/rfc0791.txt?number=791).
IPTV Internet protocol television. IPTV is the process of delivering video
and/or audio services over Internet protocol (IP) networks. These IP
networks initiate, process, and receive voice or multimedia
communications using Internet protocol. These IP systems may be
public IP systems (e.g. the Internet), private data systems (e.g. LAN
based), or a hybrid of public and private systems.
ISP Internet service provider. An ISP is a company that receives and
converts (formats) information to and from Internet connections to
Internet end users. An ISP purchases a high-speed link to the Internet
and divides up the data transmission to allow many more users to
connect to the Internet.
Kbps Kilobit per second. kbps is a measure of data transmission equal to
one thousand bits per second.
Latency Latency is the amount of time delay between the initiation of a
service request for data transmission or when data is initially received
for retransmission to the time when the data transmission service
request is granted or when the retransmission of data begins.
Lead-in The lead-in cable is the cable from the fibre jointing pit to the
customers premises.
51
1386156.4
Term Definition
LFC Local Fibre Company.
LTE Long term evolution, a 4
th
generation mobile technology. Relative to
3
rd
generation wireless, the LTE specification enables 100 Mbps+ data
transmission rates, increased system capacity and shorter
transmission latency times.
Massively
multiplayer online
gaming
A massively multiplayer online game (MMO or MMOG) is a
multiplayer video game which is capable of supporting hundreds or
thousands of players simultaneously.
MB Megabyte. A megabyte is one million bytes of data. When megabyte
is used to identify the amount of data storage space (such as
computer memory or a hard disk), a megabyte commonly refers to
1,048,576 bytes (2
20
) of information.
Mbps Megabit per second. A measurement of digital bandwidth where 1
Mbps =1 million bits per second (1,000,000 bits per second). The word
mega is sometimes used to describe the nearest integral power of 2,
namely 1,048,567 (2
20
).
OFDF Optical fibre distribution frame. This is a passive device which
terminates cables, allowing arbitrary interconnections to be made.
OTT OTT is defined as video delivered by content providers over third
party broadband networks to a range of end-user devices.
P2P Peer to peer is the exchange of information between devices or
systems that are capable of operating as both a server (provider) of
information and a client (consumer) of information.
POTS Plain old telephone service.
PSTN Public Switched Telephone Network.
RBI Rural broadband initiative.
SC/APC connector An optical fibre plug.
SD Standard definition. SD video is the resolution of traditional analogue
video. Standard definition for PAL/SECAM is 576 lines with 50
interlaced fields (50i) per second.
SME Small and medium business. A SME business is a business with 19 or
fewer employees which also meet at least one of the following
criteria:
annual expenses or sales subject to GST of more than $30,000
12-month rolling mean employee count of greater than three
part of a group of enterprises
registered for GST and involved in agriculture or forestry
over $40,000 of income recorded in the IR10 annual tax return
52
1386156.4
Term Definition
(this includes some units in residential property leasing and
rental).
UBA The regulated unbundled bitstream access service.
UCLL The regulated unbundled copper local loop service.
UFB Ultra-fast broadband.
VOIP Voice Over Internet Protocol (VoIP) is a process of sending voice
telephone signals over the Internet or other data network. If the
telephone signal is in analogue form (voice or fax) the signal is first
converted to a digital form. Packet routing information is then added
to the digital signal so it can be routed through the Internet or data
network.